TMI Blog1960 (7) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... see who does business in the name and style of "Indian Mill Stores" was by an agreement dated 10th September, 1952, appointed by the Gulf Oil (India) Limited, Calcutta, as its distributor for selling the goods of the Gulf Company in the districts of Raipur, Durg, Bilaspur, Raigarh and other districts. By clause 1 of the agreement the company granted to the assessee the privilege of selling its goods in the districts mentioned above. By clause 2 it was provided that the company would sell the distributor and the distributor would buy from the company the products at the prices established by the company in the territory concerned as on the date his order was accepted by the company and the distributor would sell to his customers on his own responsibility without rendering the company responsible or liable in any manner in respect of any sale made by him to his customers. The selling price of the distributor to his customers had to be fixed by mutual agreement from time to time. If there was no agreement for any reason, then the selling price of the distributor was not to exceed more than 20 per cent. of the company's selling price to him. Clause 4 of the agreement on which the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in first appeal and by the Commissioner, Sales Tax, in second appeal. When the matter went up in revisisn before the Board of Revenue, the Board relying on C.P. Coal Trading and Distributing Co. v. Commissioner of Sales Tax [1954] 5 S.T.C. 208; I.L.R. 1954 Nag. 355. and Govindprasad Gour. v. Commissioner of Sales Tax M.C.C. No. 210 of 1952, decided on 8th December, 1953., came to the conclusion that clauses 2 and 4 of the agreement related to different types of transactions; that while in transactions covered by clause 2 the assessee admittedly bought goods from the oil company and sold them to his customers, in regard to transactions falling under clause 4 his role was only of a guarantee-broker; and that, therefore, he was not a dealer within the meaning of section 2(c) of the Act. Accordingly, the Board of Revenue held that the assessee was not liable to sales tax on the disputed transactions. Now these references have been made at the instance of the State. 5.. Shri Khaskalam, learned Government Advocate contended that on reading all clauses of the agreement together it was clear that the assessee was appointed as a distributor with the privilege of selling the products of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or supplying goods, whether for commission, remuneration or otherwise..........." Thus the person sought to be taxed must carry on the business of selling goods whether as principal or as agent. The tax cannot be imposed unless the assessee can be said to have carried on the business of selling the goods whether as principal or as agent, Now the terms of the agreement dated the 10th September, 1952, under which the assessee carried on the business as "distributor" and the course of his business found by the taxing authorities clearly show that the assessee was not acting as a guarantee-broker who brought together the Gulf Oil Company and the purchasers of its goods but he acted as a buyer from the oil company and sold the goods at prices fixed under clause 2 of the agreement. The various clauses of the agreement have to be read together in order to determine the correct position of the distributor. So read, there can be no doubt that the assessee was granted the privilege of selling the products of the Gulf Oil Company in certain areas, and that he was to buy from the company the products at certain prices and sell it to his customers on his own responsibility and without in any w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovery of the price of goods supplied to them. Learned counsel for the assessee suggested that these suits had been filed by the assessee on behalf of the Gulf Oil Company under a power of attorney. But there is nothing on record to show that in these suits the plaintiff is the Gulf Oil Company and not the assessee. 8.. We are unable to find anything in the terms of any clause of the agreement or in the course of business of the assessee even to suggest that in regard to the transactions in question the customer purchasing the goods in the territory for which the assessee was appointed as distributor was primarily liable to the oil company for the payment of price and that the assessee undertook to discharge the customer's liability if the latter failed to do so himself. There is also nothing to show that it was at the instance of the customer that the assessee assumed this liability towards the company. The Board of Revenue thought that the countersigning of all orders by the distributor from his customers in token of the distributor's responsibility and liability to the company for the price of the goods and the provision in clause 4 that the distributor shall be responsible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mers for the coal sold to them. The assessee in those cases was held to be no more than a guarantee-broker. The question in those cases turned solely on clause 6 of the Colliery Control Order, 1945, under which coal was delivered to a consumer at a rate fixed by the order when a colliery owner signified his willingness to sell direct to a consumer and an allotment had been made by the Deputy Coal Commissioner to the consumer with his consent for such direct sale. Under the Control Order a person could not purchase from a colliery coal on certain favourable or advantageous terms and then sell it to his customers. The sale had to be directly by the colliery owner to the consumer. In C.P. Coal Trading and Distributing Company v. Commissioner of Sales Tax(2), the consignments were addressed to by the company to the consumers and the railway receipts were also sent directly to them, In Govindprasad Gour's caseM.C.C. No. 210 of 1952, decided on 8th December, 1953. which only followed the case of C.P. Coal Trading and Distributing Company v. Commissioner of Sales Tax[1954] 5 S.T.C. 208; I.L.R. 1954 Nag. 355., the assessee did the business of procuring coal from M/s. Shaw Wallace Limited, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ". The position of the assessee Dayaram Rathod is not different. In Hope P. Co. v. Hamel Horley, Ltd. A.I.R. 1925 P.C. 161. it was observed by the Privy Council"In many trades-particulary, for instance, in the motor car trade-the so-called agent is merely a favoured and favouring buyer, one who under an overriding contract undertakes to do his best to find a market for the manufacturer's stock, who is given some special advantages, such as a special discount or preference in complying with his orders; but who in each particular contract acts as a buyer from the manufacturer and sells at whatever price he can get, unless-as is sometimes the case-he is by a special provision in the overriding contract forbidden to sell too cheaply or required not to spoil the market by asking too much." These observations adequately sum up the position of the assessee as one who bought goods from the Gulf Oil Company and sold them to his customers at prices fixed according to the special provision in the agreement. We are clear in our mind that in regard to the disputed transactions the assessee bought goods from the oil company and then sold them to his customers. He is therefore, a "dealer" wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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